Breaking Your Lease Early: How to Avoid Lease Break Fees
Need to learn about breaking a lease early? Welcome to the full guide on breaking lease agreements in Australia. While breaking a lease is never an optimal decision, life can change quickly! If you're renting a home in Australia and need help with learning about the legality of lease-breaking including lease break fees, read on for more info!
- What does it mean to break your lease?
- Breaking a lease means leaving your tenancy agreement before the end of the agreed-upon length of tenancy. In other words, breaking your lease means moving out before your contract is up!
Can I Break My Lease Early?
You can break your lease early under certain circumstances.
If you have a periodic lease or month-to-month rental agreement, there is no fixed term to the lease. This means you are free to "break your lease" at any time and move out of the property after giving one month’s notice without a penalty fee.
Sometimes, tenants need to break their lease early but do not have a periodic lease. Instead, they may have a fixed-term lease. You can break your fixed-term lease under very specific circumstances. However, Australian law tends to side in the favour of the landlord or property manager when leases are broken.
There is no one-size-fits-all rule to breaking a tenancy early. Instead, there are many factors that influence a lease break.
Some of the factors that decide if you can break your lease are:
- The reason for breaking the lease early
- The laws in the state where you live
- The type of tenancy agreement you have
- The agreement you and your landlord come to
If you need to break your residential tenancy agreement early, it’s important to be as cooperative and open with your landlord as possible and avoid leaving on bad terms whenever possible. This is a good practice to keep, especially if it's your first time renting.
If you have a bad relationship with your landlord we recommend reaching out to a tenants’ union for help breaking your lease and to learn more about your rights as a tenant in your state or territory.
Can a Landlord Break a lease?
A landlord can break lease agreements as long as they break the lease according to the tenancy agreement.
Some common reasons that landlords can break lease agreements are:
- You broke the terms of the tenancy agreement
- You failed to pay rent
- The building is being demolished
- The building is to be remodelled
Depending on where you live, the rules for a landlord breaking a lease change. Typically the rules state that the landlord must give you ample notice to find new housing if they want to break the lease.
However, a landlord can break a periodic term lease whenever they like as long as they give the tenant 2 months notice.
Landlords cannot break a fixed term lease at any time before the lease agreement has ended unless they have a very specific reason.
|Type of Lease||Definition of Lease|
|Periodic Lease||A periodic lease is not set for a fixed term and is instead set for a recurring time period that could last indefinitely. The periodic lease renews automatically until the landlord or tenant ends the agreement.|
|Month-to-month Lease||A month-to-month lease is also a form of periodic lease. Often when a fixed-term lease expires the lease automatically turns into a periodic month-to-month lease.|
|Fixed-term Lease||A fixed-term lease is a lease that has a set end date. When the lease is up, a new agreement must be signed unless the landlord decides to continue with a periodic lease.|
If landlords do not have a valid reason for breaking a lease, then they cannot break the lease before the lease agreement has ended.
Legal Reasons for Terminating Your Tenancy Early
Each Australian state or territory has its own rules and exceptions when it comes to legally terminating a tenancy agreement early.
Therefore, it’s always best to consult your state’s housing authority for specific circumstances. However, there are some legal reasons you might be able to leave your tenancy early without needing to pay additional costs.
Some of the reasons that allow a tenant to legally break a lease early include:
- Undue Hardship
- Breach of Contract by the Landlord
- Uninhabitable Premises
1. Ending a Lease Due to Undue Hardship
Undue or excessive hardship often means financial or health issues that prevent you from paying the remainder of your lease or remaining as a tenant on the property.
The exact definition of undue or excessive hardship differs by state or territory, and you might still be ordered to pay compensation following the termination of the agreement. However, if you’re experiencing hardship and need to terminate your lease early, you will need to submit an urgent application to your state or territory’s tribunal. You may be entitled to renters assistance and be able to stay.
2. Breach of Contract by the Landlord
If your landlord is repeatedly breaching the terms of your tenancy agreement, you can usually apply to have the agreement terminated early without penalty.
Keep in mind that your landlord will probably need to have breached the contract several times before you’ll be allowed to legally terminate the lease, but breaches of contract can include your landlord not fixing a fault on the property (see below: Uninhabitable premises) or not respecting your right to privacy and/or entering the premise without notice.
3. Uninhabitable Premises
If the premises are not up to minimum standards prior to moving in, or if the property becomes unlivable, you can usually terminate your residential tenancy agreement early.
A property is generally considered unlivable if it is dangerous or a hazard to your health, such as poor drainage, defective wiring, or bad ventilation. Depending on the issue, you will need to submit a repair notice and give your landlord time to fix or repair the problem.
How to Terminate a Lease Early Without Penalty
Read up on your rights as a tenant
Reach out to your local Tenants’ Union for advice if you’re unsure about how to proceed with terminating your lease early. Even if you are sure about how to terminate your lease early, arming yourself with knowledge on tenants’ rights in your state can keep the cost of breaking your lease down.
Check for a legal cause to terminate your lease early
If you have a legal cause to break your lease, then follow the necessary steps to apply for early termination. This might include applying for early termination through your state or territory’s tribunal, and writing a notice of early termination to your landlord. Depending on the legal cause and the state you live in, the minimum days’ notice you need to give before moving out will differ.
Check your tenancy agreement for loopholes
If you don’t have legal cause to break your lease, read over the signed tenancy agreement and look for anything it might say about early termination. This should spell out what you can and cannot do when it comes to terminating your lease, such as subletting or early release, and any costs you might be held responsible for like advertising or letting fees.
Give notice to terminate your tenancy agreement
If you don’t, or can’t, apply for early termination through a tribunal. This is known as a Notice to Terminate a Tenancy Agreement which outlines your notice to terminate the agreement by a specific date. It should include your name and address, the date of writing, your landlord’s name and address, the number of days notice and day you’re moving out, and be signed by you.
Cover the costs of terminating the lease early
This might include rent up until a new tenant moves in, the costs of advertising the property, letting fees, or break fees. You might be able to assist your landlord with finding a new tenant, or finding one to sublet from you (depending on the agreement you and your landlord come to), which might reduce the costs that come with breaking the lease early.
What Happens if You Break Your Lease Early?
The cost of breaking a lease early depends on the state or territory of the property, the type of lease, and how long you might have left on your tenancy.
Potential consequences of breaking a lease early may include:
Lease Break Fees: Usually equivalent to X number of weeks’ rent & vary depending on the agreement
Lost Rent: The amount of rent your landlord would lose from now to the end of your lease.
Re-letting and Advertising Fees: The costs associated with putting the rental property back on the market.
Loss of Rental Bond: You may lose your right to receive a refund on your rental bond.
If you need to pay lost rent, re-letting, and advertising fees, make sure to get written agreements on the amount you will need to pay and keep a record of the advertisements your landlord puts up.
This will ensure your landlord is making a reasonable effort to get the new vacancy filled as quickly as possible.
Below we go over the consequences of breaking a lease in each state:
Breaking a Lease NSW
If you’re breaking a lease in New South Wales, the type of lease you signed and when it was signed will affect what you might need to pay if you terminate your lease early.
The residential tenancy laws in NSW were amended on March 23, 2020. The following information applies to leases and tenancy agreements signed after March 23, 2020.
Below, you will find an outline of the costs associated with terminating your tenancy agreement early in NSW.
|Lease Type:||Lease Break Fees To Pay:|
Agreements of three years or less
|Mandatory break fees may apply and vary based on the stage of the agreement:
|Agreements of more than three years||The tenant and agent/landlord may negotiate on an agreed upon amount of compensation. If no agreement can be made, a landlord may seek compensation by applying to the NSW tribunal.|
|Optional break fee included in the agreement||If the break fee clause is included in the tenancy agreement:
|Optional break fee not included in the agreement||If the break fee clause is not included in the tenancy agreement: The tenant and agent/landlord may negotiate on an agreed upon amount of compensation. If no agreement can be made, a landlord may seek compensation by applying to the NSW tribunal.|
Breaking a Lease ACT
If you’re breaking your tenancy agreement early in the ACT, how much you need to pay depends on the following conditions:
- How long you have left on your lease
- The type of lease agreement
- If the landlord finds a new tenant within a defined period of time after you (the tenant) ends the lease
The cost of breaking a tenancy agreement is outlined below.
In the ACT there are two charges you will be expected to pay if you break lease agreements:
- The default lease break fee = a sum equivalent to X month's rent
- The maximum defined cost = a sum of reasonable costs of renting & advertising the property until it is re-rented
If someone fills your vacancy before the defined period (six weeks for a tenancy less than halfway through the lease or four weeks for a tenancy more than halfway through the lease) the new tenant will assume the rest of the default break fee cost as the start of their rent.
|Length of Lease||Default Lease Break Fee
(Agreements for three years or less)
|Maximum Defined Cost
(If tenancy is filled within defined period)
|If the tenancy is less than halfway complete||6 weeks’ rent||1 week rent|
|If the tenancy is more than halfway complete||4 weeks’ rent||Two-thirds of one weeks’ rent|
We know this is confusing! So, you can find a guide on the Australian Government's website explaining it in greater detail.
Breaking a Lease VIC
There is no designated "lease break fee” in Victoria that tenants need to pay when ending a lease early. However, landlords can request certain costs be covered by the tenant leaving.
Costs a tenant may need to cover for breaking a lease in Victoria include:
Lost rent: VCAT will be the one to decide on how much rent the tenant needs to pay in compensation when breaking a tenancy early. However, if the landlord rents the property to someone else, then the tenant does not need to pay after the apartment has been re-let.
Advertising costs: The tenant may need to cover the cost of advertising the property to look for a new renter. The amount of advertising costs must be deemed what most people would think is “reasonable and fair” and if the tenant and landlord cannot agree on what is reasonable and fair, they can apply to VCAT to make a decision.
Re-letting fees: A tenant who has broken their tenancy agreement might need to pay re-letting fees, or the costs associated with a real estate agent putting the property back on the market. This is usually proportional to the percent of time left on the lease.
If you broke your lease early in Victoria you will not need to pay:
- An additional penalty for breaking the agreement
- Rent once the new tenant is on the property
- Advertising fees if the property was not advertised
- Re-letting fees if the property is rented directly through the owner with no agency
Breaking a Lease QLD
There is no defined lease break fee in Queensland, but any termination without legal grounds will probably come with compensation to the landlord. This cost includes losses and expenses associated with the termination of the lease, such as advertising costs, re-letting fees, or loss of rent. This compensation needs to be discussed between the landlord and tenant, and can include how the rent bond is paid out.
Breaking a Lease SA
If a tenant terminates their rental agreement early in South Australia, they are liable to pay for any costs associated with the loss of the tenancy.
This includes re-letting fees, lost rent, and advertising costs. However, the landlord can only claim these fees if they try to relet the property as soon as possible, also known as “mitigating” the loss.
However, to pay for these fees the landlord must comply with the following:
- Is advertising the property appropriately
- Has put the appropriate rent cost and is reviewing the rent regularly
- Is showing the property to prospective tenants
- Is not raising the rent, thus delaying the property from being leased
There are specific formulas set out for the fees associated with advertising and re-letting.
These formulas do not apply if:
- The tenancy agreement is broken within the first quarter of the lease term. The full costs can be claimed.
- You (the tenant) continue to pay rent until the end of the fixed-term lease, as the lease obligations are met.
|Advertising cost||Advertising cost x number of weeks left on the agreement / divided by ¾ of the whole tenancy term|
|Reletting fee||Agent letting fee (including GTS) x number of weeks left on tenancy agreement / divided by ¾ of the whole tenancy term.|
Breaking a Lease WA
If you don’t have a just cause for breaking your tenancy early in Western Australia, you might be liable to pay the landlord for:
- Lost rent
- Maintenance expenses
- Any other reasonable costs.
Even if your tenancy agreement ends, you still need to give 30-days written notice before terminating your tenancy to avoid paying other costs.
Breaking a lease Tasmania
If you break your rental agreement in Tasmania without proper cause, you might need to pay for any costs associated with finding a new tenant.
You will also have to cover the rent until either a new lease starts or until the end of the current lease date, whichever comes first. During this time, the landlord will need to make reasonable attempts to find a new tenant as quickly as possible.
Breaking a Lease NT
If you break lease agreements early in the Northern Territory you are liable to pay the loss of rent for the remaining time on your lease, or until the property is relet, whichever comes first.
In addition, you might also need to pay the fees for an estate agent to re-let the property, if you break your lease early.
A landlord might keep your rental bond, to cover the costs associated with finding another tenant and the loss of rent. If they claim more than the rental bond is worth, they might seek additional compensation through the Northern Territory Civil and Administrative Tribunal.
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